Biden Administration Expanding Pay Rule Change, Makes 4 Million Salaried Employees Eligible for Overtime Pay

By Moon Harper

Apr 26, 2024 01:12 AM EDT

On Tuesday, the Biden administration introduced a new rule that could get millions of salaried workers paid for working overtime.

Biden's New Pay Rule Declaration

The Department of Labor declared the minimum salary threshold raise for exempt employees from $35,568 per year to $43,888 starting in July, increasing it to $58,656 on January 1, 2025.

Businesses must pay workers 1.5 times their normal pay for hours worked over 40 in a week. However, this protection only applies to hourly workers and lower-earning salaried employees. According to Acting Labor Secretary Julie Su, under the new thresholds, those earning under $58,656 will qualify for overtime pay in 2025.

Salaried workers labeled executive, administrative, or professional do not receive overtime pay. Researchers have noticed companies giving false titles like grooming manager to regular employees to avoid paying overtime. The new rule states that only genuine executive, administrative, or professional workers are exempt from the expanded overtime rule.

Improving Workers' Condition

The rule will reinstate the commitment of giving workers additional pay if they work more than 40 hours a week. Acting Labor Secretary Su emphasized that lower-paid salaried workers often perform the same tasks as their hourly counterparts but without extra compensation, resulting in excessive time away from their families. Su labeled this situation unacceptable and highlighted the Biden-Harris administration's dedication to improving conditions for workers, contributing to the nation's economic growth.

The new rule may impact certain salaried employees earning six figures annually. Workers in various sectors can be exempt from overtime if they earn $107,432 per year. However, as of July 1, this threshold will rise to $132,964 per year and increase to $151,164 per year by January 2025.

According to Samantha Sanders, Director of Government Affairs and Advocacy, and President Heidi Shierholz of the Economic Policy Institute, employers will have no trouble adapting to the rule without harming the economy.

The Department of Labor estimates that the new rules will impact millions of workers and could result in an extra $1.5 billion in pay for employees.

Opposition to The New Pay Rule

The American Council on Education, a nonprofit advocacy group representing 1,700 colleges and universities, plans to challenge the new rule in court.

American Council on Education President Ted Mitchell highlighted that colleges and universities are significant employers in numerous communities, offering stable jobs and favorable benefits to nearly 4 million workers nationwide. He pointed out that most of these institutions are nonprofits and public entities, which may struggle to accommodate abrupt and substantial rises in labor costs, such as those outlined in the Department of Labor's final rule.

Critics, including U.S. Rep. Virginia Foxx, have voiced concerns that the new regulation could burden companies with additional expenses and worsen ongoing labor shortages. Foxx, a North Carolina Republican and chair of the House Education and the Workforce Committee, stated that employers may face billions in annual compliance costs and criticized the regulation as excessive and overly controlling.